According to the Asian Development Bank (ADB), this figure is 0.2 percentage points lower than the forecast released in April. Prolonged disruptions in the energy market due to the conflict in the Middle East have affected the regional economic outlook more seriously than expected, according to the latest ADB economic outlook report released today.
ADB's growth forecast for 2027 remains unchanged at 5.1%, reflecting expectations that economic activity will recover as these pressures gradually subside.
The Asian Development Outlook (ADO) report in July 2026 stated that disruptions in the global energy market will only be gradually overcome, although a framework agreement was signed in June.
As the impact of the conflict spreads from the energy sector to fertilizers, other goods and the supply chain, inflationary pressure is forecast to continue to extend. The region's inflation is currently forecast to be at 4.3% this year compared to 3% in 2025, an increase of 0.7 percentage points compared to the forecast in April. The inflation forecast for 2027 is still maintained at 3.4%.
ADB's Chief Economist, Mr. Albert Park, said: "Sustainable implementation of the framework agreement will contribute to bringing the global energy market back to normal, but the pace of adjustment is very unpredictable and potentially risky in a disadvantageous direction.
The economic growth of developing Asia and the Pacific still maintains its resilience, but the prolonged obstacles caused by conflicts require policymakers to carefully balance the goals of supporting growth and curbing inflation.
The ADO report for July 2026 also warned that the risk of conflict escalating again and prolonged geopolitical instability remain major risks for the region's prospects. These factors could continue to tighten the energy market, increase risk premiums and exacerbate inflationary pressure as well as external pressures.
Tighter global financial conditions also create more risks, as government bond yields and borrowing costs increase, while fiscal deficits are forecast to widen in some economies. In addition, higher tariffs and more uncertain trade policies could also weaken economic activity, while rising fertilizer prices continue to threaten agricultural output and food security.
ADB has adjusted down its 2026 growth forecast for most sub-regions, except for developing East Asia. The growth forecast for the People's Republic of China remained unchanged at 4.6% in 2026 and 4.5% in 2027, thanks to maintaining strong exports and infrastructure investment.
India's growth forecast was adjusted down to 6.6% this year due to rising energy costs weakening domestic demand, while forecasts for next year remain at 7.3%.
The growth forecast for Southeast Asia and the Pacific was also adjusted downwards, reflecting weakening domestic demand and tourism activities, rising inflation and higher import costs.
